On September 11, 2018 the last negotiations between the Crypto Exchanges and the Reserve Bank of India (RBI) will start in India. The end of the negotiations will bring more security for Indian investors – for better or for worse. The arguments at a glance.
In India, the regulatory loop for crypto enthusiasts, traders and exchanges had become increasingly tight. Earlier this year, Indian Finance Minister Arun Jaitley made it clear to the Indian Parliament that he did not recognise Bitcoin as a currency. Some time later, Indian tax offices sent questionnaires to investors in crypto currencies – with the intention of making back taxes. In the course of this, the government formed a committee to discuss possible regulations for dealing with Bitcoin and other crypto currencies. As crypto currencies are still not recognised as a means of payment, companies began to use a loophole. So they switched the Unocoin exchange between themselves and the customers who took care of exchanging crypto for Fiat.
Contra-Bitcoin: fraud, inner values and Bitcoin secret
But the Indian financial regulator also closed this loophole described in this review – RBI had instructed the stock exchanges in April to close all crypto transactions within three months. After the deadline of 6 July, the Indian Bitcoin community had suffered accordingly. The number of Bitcoin secret transactions fell sharply. But in the course of these regulatory restrictions, the stock exchanges decided to go to court.
Now representatives of government, central bank and stock exchanges are facing each other in court. The reasoning should come as no surprise. It is the central bank, for example, that is leading the way in protecting against investors. Here they want to protect against fraud and money laundering. Another problem is the lack of internal currencies – crypto currencies are not secured by assets. Similar arguments come from government representatives – here we go so far as to call Bitcoin a Ponzi scheme.
Pro-Bitcoin: Transparency and the Indian Constitution
The stock exchanges, on the other hand, refer mainly to the Indian Constitution. Article 19, for example, stipulates that all citizens may exercise any profession, trade or business. They also refer to Article 14, which prohibits discrimination and provides the same protection under the law for all.
The stock exchanges also say that they have largely complied with the anti-money laundering directives, which help the authorities to follow the path of money. Now, however, a large part of the trade has shifted to cash transactions, which can lead to illegal activities, a result that has even recently been recognised by the RBI.
Finally, the stock exchanges have declared their willingness to the Central Bank and the authorities to ensure greater transparency.